Construction market overview: June 2017

The result of the UK general election has created greater uncertainty during a critical time, a time when Brexit talks are set to begin. Changes made to the cabinet are also contributing to this uncertainty. Housing Minister Gavin Barwell lost his seat in government, however he has been appointed as Teresa May’s chief of staff. Alok Sharma has been appointed as the government’s new Housing Minister, replacing Gavin Barwell. Sajid Javid has been reappointed Communities and Local Government Secretary, where he retains responsibility for house and planning. And Michael Gove has been appointed to the post of Secretary of State for Environment, Food and Rural Affairs.

Commenting in AJ on the loss of Gavin Barwell as Housing Minister, Nicholas Boys Smith, director of Create Streets, said: “There will be many from across the housing sector and political spectrum who regret that. He was widely seen as getting on top of his brief and being impressively pragmatic and hard working.” This is echoed by the British Property Federation who say “the loss of Gavin Barwell as Housing Minister is a frustrating disappointment given the excellent work he has put in over the past year.”In Dezeen there is some optimism “A hung parliament will inevitably lead to greater questioning of the direction the UK will take. This will bring yet more problems, but also opportunities that I for one welcome,” said architect David Kohn.

Housebuilder Crest Nicholson have announced their half year results saying “The outcome of the UK General Election may introduce some uncertainty in the short term but we expect the new build housing market to remain robust.” Latest market figures reflect this uncertainty, yet the housing market remains strong.

Offsite modular construction is seen as one of the potential answers for fixing our broken housing market. The role of offsite manufacture in housing continues to gain importance, as L&G announce the appointment of Rosie Toogood as CEO to lead L&G modular housing and their new Director David Jones joins from Berkeley Homes. Meanwhile Berkeley are reported to be looking for a site for their own modular factory. And Swan Housing Association has taken possession of its new factory in Basildon which will produce modular homes for its nearby Beechwood site.

Glenigan report that prospects for capital investment in the education sector have received a boost, as the shift towards modular buildings takes another step forward with a national £225 million framework going live this month.

The Halifax House Price Index reports in May 2017 house prices increased 0.4% compared to April, and prices in the three months to May were 3.3% higher than in the same three months a year earlier. Yet the Nationwide House Price Index states that in May 2017 house prices were 0.2% lower than April, making this the 3rd consecutive monthly decline for the first time since 2009. And annual house price growth slowed to 2.1%, the weakest in almost four years, evidence the housing market is losing momentum.

Barratt Developments PLC has issued a trading update for 1st January 2017 to 7th May 2017 showing a strong performance and confident outlook, as total completions for the year are expected to be around 17,350, the highest number of completions in 9 years. Alongside this Glenigan report Barratt as resuming its position as most active volume housebuilder in terms of developing land through the planning system, with a 65% rise in the number of units included in detailed planning applications made by Barratt last year compared to 2015.

Market intelligence from Turner and Townsend shows that contractors expect tender prices to increase in 2017. The cost of construction projects in London are forecast to rise 4.1% in 2017, and in Manchester there is an expected increase of 3.6%, demonstrating the traditional north-south divide in build costs is closing.

And finally, new data has revealed construction equipment exports remain buoyant, as figures from the Construction Equipment Association (CEA) show growth in exports during the first quarter of 2017 with numbers reaching £700m, the highest level seen since Apr-June 2015.